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The Competitive Effects of Consumer Boycotts

Author

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  • Marco A. Haan

Abstract

I introduce the possibility of consumer boycotts in a Hotelling model. The more a firm complies with consumers' wishes, the higher its marginal cost, but the lower the probability of facing a consumer boycott. I show that the threat of a consumer boycott can increase the expected profits of firms. Firms lose out when they do face a boycott, but gain even more when their competitor does, giving them more market power. The stronger a boycott will be, the more a firm will cater to consumers' wishes. Yet, the effect of more competition is ambiguous.

Suggested Citation

  • Marco A. Haan, 2023. "The Competitive Effects of Consumer Boycotts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 179(2), pages 251-270.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2023-0024
    DOI: 10.1628/jite-2023-0024
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    More about this item

    Keywords

    consumer boycotts;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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